Apple (NASDAQ: AAPL) is arguably the most talked-about and traded stock in the 2020 market. The Apple bull shrugged off the February and March bears and climbed 139% since the bottom. However, Apple’s meteoric rise is attracting a fair amount of pessimists leading into 2021. Especially as the economic carnage continues and speculations of a tech bubble are still looming. At face value, the Apple bull is showing no signs of fatigue. The release of its iPhone 12, which includes 5G, and analyst upgrades, should act as the wind under the bull’s wings. Nonetheless, today’s article will breakdown Apple’s 2021 forecast for our readers.
Table of contents 1. Why analysts, institutions, and professional investors are bullish for 2021 2. What you need to know before investing in Apple - YIG's take
Will the Apple bull run out of gas before 2021?
Apple holds a bright 2021 future for four reasons. These include:
- The release of cheaper 4G iPhone’s and the iPhone 12
- Upgrades from Wedbush analyst Daniel Ives
- The historical bullish reaction after stock splits
- The recent Warren Buffet rally.
Apple is notorious for its flagship product, the iPhone. However, Apple’s entire product range are now household items. The integration of Apple into every facet of our lives allowed AAPL’s product lines to sustain their huge sales volumes during the pandemic. Considering COVID-19 is continuing into 2021, Apple should still maintain its 2020 sales volumes. Especially as customer loyalty seems to grow in times of crisis. Apple’s brand loyalty, encouraged Warren Buffet to snap up shares,and made up to 40% of Berkshire Hathaway’s equity portion earlier this year. Consequently, retail investors followed Buffet’s tracks and invested in Apple, as they saw the brand loyalty skyrocket during 2020. Thus, Apple’s unwavering customer base should propel the bullish run into 2021 (opinion, not advice).
IPhone 12 bullish anticipation
Despite having a suite of products, Apple’s iPhone is their biggest wallet and eyeball magnet. Each year the world waits in anticipation in the lead up until their September launch. For 2020 it is the iPhone 12, which Wedbush analyst Daniel Ives believes, “represents the most significant product cycle for Cook & Co. since the iPhone 6 in 2014″. Not to mention it will be the first Apple iPhone with 5G. Hence Ives recent upgrade from $515 to $600, which is way above the average analyst price target of $445. The significance of the iPhone 12 saw Wedbush maintain their outperform rating on Apple. Primarily because Ives believes the super cycle product will be the driving force behind the 2021 Apple bull. However, supply disruptions will see the iPhone 12 come out in October of 2020, ultimately heightening the build-up. Thus, the above-average hype should trigger a buying frenzy at the end of 2020 and into 2021.
In addition to analysts and professional investors, retail investors are also snapping up Apple shares. The recent 4-1 stock split saw a tidal wave of everyday investors join the Apple 2020 party. Especially as the price allowed retail investors to purchase fractional shares on platforms like Robinhood.“Historically, after Apple has split its stock, the following year’s return has outpaced the performance of the S&P 500, except for the dot com crash”. Thus, despite the recent bearish onslaught, the stock-split should see Apple rage into 2021 (opinion, not advice).
Here’s what you need to know before investing in Apple pre-2021
Before I begin, I am obliged to remind our viewers that this is not financial advice but rather investment commentary from extensive research
To a large extent, it seems the Apple 2021 bull scenario is likely. Especially when you factor in the enormous iPhone 12 hype, the spike in Wedbush’s optimism, and the retail tsunami following the stock-split. Apple has enough catalysts in its quiver to sustain the bullish run into 2021. However, mid-course corrections would not be surprising.
Counterarguments to the 2021 Apple bull
Furthermore, while the Apple cheerleaders have a loud voice, its essential to pinpoint the drawbacks of an AAPL investment. First, Apple might be pandemic proof, but it is not recession-proof. If the recession infiltrated the stock market, Apple would likely turn bearish (opinion not advice). Thus factoring in an economic downturn is crucial when investing in Apple. However, for now, the economic recovery is favouring the Apple bulls. Also, tech bubble or not, Apple’s trillion-dollar market cap might become unsustainable. In which institutions would be the first to sell, and retail investors would likely get burned. Overall, YIG does see validity in the 2021 bull argument but stresses the importance of the potential holes.
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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
Written by Patrick McLoughlin, Senior Manager of YIG.